Ex-UBS broker activities said probed in Puerto Rico

UBS building

U.S. authorities in Puerto Rico are investigating allegations that a former UBS broker improperly advised clients to borrow money to make investments, a person briefed on the probe told Bloomberg.

Bloomberg News reports that investigators are examining what UBS employees knew about the use of non-purpose loans to clients who bought into closed-end funds, the person said, asking not to be identified because the inquiry is confidential. A customer said last year he was given credit to buy risky bond funds holding the island’s government debt.

UBS said in October it had put the broker on leave while examining loans to clients. The firm has concluded a review and terminated the employee, said Karina Byrne, a spokeswoman for the bank.

Yields on Puerto Rico bonds soared to records last year as fiscal strains cast doubt on the ability of the commonwealth and its agencies to repay debt. Puerto Rico obligations lost 20.5% last year, the steepest drop since at least 1999, Standard & Poor’s data show. Last month, the debt staged its longest rally in a year.

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UBS Loans to Puerto Rico and Investors Said to Face U.S. Probe

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